Pattern Opportunity – Short Bio-Tech (BIS)
POWER OF THE PATTERN EXAMPLE
Pattern Analysis for Opportunity in Bio-Tech (IBB/XBI)
Sequence of Member Communications
PATTERN OPPORTUNITY TO SHORT BIOTECH (BUY BIS) SHARED: 2/28/14
When Apple was the hottest thing going it also came up against a major resistance point at Fibonacci 423% (Chart A). In addition, sentiment readings were pushing 95%, which should warrant caution of a near term top at the very least.
(Chart B – Upper), then created a “doji Star” topping pattern, then proceeded to lose 35% of its value.
The hottest thing on the planet right now is Biotech. It is hitting a steep resistance channel line and fib extension right now and could be creating a bearish doji star this week.
buying IBB (2x inverse bio tech is BIS ) I am going to give this position 7% stop, which is twice that on the 2x)
This is not for the faint of heart!!!CHART
TOP CHART APPLE, BOTTOM CHARTS BIO-TECH (IBB)
April 3 Update on Bio-Tech position
We have to face this….from a technical point of view, some of the largest drops in any asset take place when support breaks, then a rally is attempted to climb above new resistance and then it fails.
This is when sellers say…holly cow and start selling big time.
We could be near this situation in the white hot bio tech sector!!!
I remain short Bio Tech, have given back some gains the past few days, yet when you look at the chart, you can see, IBB remains below its very steep rising channel. It is attempting to climb back into this channel.
if it fails to do so, sellers could really step in!!!
April 4 Update on Bio-Tech position
Taking action…harvesting a some of my $BIS holdings.
Do I feel $IBB and $XIB have a lot more to fall? YES!
Some times it can pay to harvest some 2x inverse etf when up 15% in a couple of days!
April 10 Update on Bio-Tech position
I don’t like using the word crash and I shouldn’t have ….sorry!
Let me put it this way…a Big A–, decline in Bio Tech land could take place if this read is correct, per kissing the underside of resistance of the head & shoulders topping pattern.
April 12 Update on Bio-Tech position
Which emotion is in the drivers seat during a steep decline in prices? Fear or Greed? IMHO, its fear.
In sharp declines, for what ever reason, Fib levels seem to work really well. As an example last Friday’s close (4/4) IBB closed right on its 23% Fib support level.
This past week it was taken out. Next Fib support level (38%) comes into play at 190, around 10% below current prices. If this decline takes place and a person owns the 2x inverse, a 20% gain could be in the cards.
In the long-term I believe IBB falls well below the 190 level. In the short term, if 190 is hit quickly, it could be a point to shave some gains off IBB.
I believe that leadership is key, we started shorting BIO 3-days from the all-time highs and its worked out well so far. When this worm turned, it believe it started influencing the broad markets!
Please print this chart off and keep for reference to support bounces in IBB and the broad markets.
April 15 Update on Bio-Tech position
Most look at IBB for bio tech price and patterns, look do something different and look at XBI today.
XBI rallied over 100% inside a rising channel, it is now testing the bottom of this channel for the first time in over a year (where it rallied 100%). I think this dual test of support is big, for the big picture.
Bio is still in the drivers seat, per being hot, now on the downside.
If this support fails to hold, I suspect the 190 target in IBB is reached pretty darn quickly.
Let what happens here in XBI to be your guide if you want to own more RWM or PSQ!!!
April 16 Update on Bio-Tech position
Yesterday morning I shared that a dual test of support was taking place in the bio tech sector.
The boys at mission control took it below the line in the morning and then they turned it on a dime and took the whole market up with it.
Right now the Bio Tech sector is the “key master” to bigger picture moves. What happens at this support is “wildly important!”
I will do my best to keep you abreast of key price action. If you can, reproduce this chart on your own charting software and lets watch it like a hawk together.
May 29 Update on Bio-Tech position
Biotech IBB and XBI did hold support and move higher to break above initial key resistance. Members who sold on initial support were rewarded with 30+% gains. Will look to short biotech again at higher resistance.
I hope this example provides helpful insight into how I attempt to find quality patterns for members on a daily basis.
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